The Corona Virus Impact On The Real Estate Market In Spain
Buying Property in Javea After COVID-19
It seems like just a few weeks ago I was sat amongst friends discussing our plans for Easter. One couple were planning on staying in Javea, a retired friend was thinking of visiting the UK, but was worried that traveling would be very congested to and from the airports, and another friend had her eye on Barcelona.
Little did we know that just a few days after that conversation, the entire country would be under lockdown due to the threat of COVID-19. We had of course previously heard of the coronavirus, but until the state of emergency was declared, it seemed scary enough, but somehow still remote. It was something that was happening, but not in our little world.
Today, as Spain reaches the halfway mark of week 6 of lockdown, we have had time to reflect on how the virus has dramatically changed our lives, both in the short and long term. As an estate agent, I have also had to ponder on what the virus and subsequent lockdown means to my business and to my customers.
The Property Market
Firstly, the longer the crisis and lockdown last, the more the property market will stagnate and eventually experience disruption, and prices will drop. By how much is anyone’s guess, but this will come as a significant blow to homeowners in Spain who have only recently experienced the market values of their homes recovering from the economic crash of 2008.
If you currently have a home for sale, you can expect to be in it for the long haul. Nothing can sell right now because agencies are closed, banks are only able to deal with emergencies, and would-be clients are banned from setting foot on the street apart from making short trips fro essentials.
If you have been thinking of purchasing a property, your search (unless you are still at the online stage) will need to be put on hold for now, as lockdown does not allow for house viewing. Furthermore, as a buyer, you would be wise to see how the market develops before making a firm decision.
In beach resorts such as Javea, many owners purchase a holiday home and let it out at various times of the year to help pay for maintenance costs, rates, community fees, etc. Due to lockdowns both in Spain and abroad, these owners should expect a lengthy period of their homes remaining empty and, therefore, no rental income. Such owners could also further suffer if other sources of income decrease or dry up due to the virus.
The government has declared mortgage-relief procedures for people in need, but this only applies to homeowners with a mortgage on a primary residence and who are classified as ‘economically vulnerable.’ This could apply to you if you lose your job due to the COVID-19 virus, or if your earnings drop 40% or more if you are self-employed or own your own business. You could also be viable if your total household income is less than 1,613€ a month.
Many foreigners who live permanently in Spain won’t fall into these categories and will not receive any help with bills or mortgage repayments.
Owners who have a property in Spain but live in the UK, France, or Germany, etc., can expect some time to pass before they can revisit their homes in Spain.
If this applies to you, you should take steps to make sure there is enough money to pay the mortgage (where applicable) plus potential maintenance fees. Depending on where your property is, it is likely also a good idea to ask a friend or neighbour to keep an eye on the property and if possible, go inside from time to time, as empty properties become a magnet for squatters, particularly during difficult financial times.
Nobody knows how long the COVID-19 pandemic will last and what long-term outcomes it will have on our societies and finances.
At this point in time, our biggest concern must be to keep ourselves and others in good health and isolate as much as possible, only venturing out for the most necessary day-to-day items.
As per lockdown regulations, our office is currently closed to the public, but we are available via phone or virtually to give advice and arrange property management services if needed.